Address at the launch of the Low Emissions Technology Statement 2021, COP26, Glasgow
Good morning and thank you for coming.
I’m pleased to have the opportunity, here at COP26 in Glasgow, to talk about the latest developments in Australia’s technology-led approach to reducing emissions.
Last week, the Morrison Government announced our Plan for Australia to achieve net zero emissions by 2050.
That’s net zero, not zero – and I’ll come back to that in a moment.
The Plan is the culmination of more than two years of work.
That work first began in the second half of 2019 with two significant initiatives.
The first was a review of the Emissions Reduction Fund, Australia’s national carbon offsets scheme, led by Grant King.
Grant and his fellow panel members were asked to look at both sides of the ERF: ways to make it easier to credit activities that reduce emissions or generate offsets – increasing supply - and easier for businesses to voluntarily purchase those offsets – increasing demand.
Many of their recommendations have already been implemented.
Most importantly, we have changed the way we develop ERF methods and accelerated them.
In the three years before the review, we had developed just three methods. We’re now doing five per year.
And we’re seeing a great response from business:
- record project registrations,
- record abatement with 17 million tonnes expected in 2021, and
- voluntary demand up more than 40% in the 2021 financial year relative to a year earlier.
Let me tell you why this is so important, why a seemingly arcane topic like carbon credits really matters and why our Plan is for net zero, not zero.
Australia is the world’s 4th largest energy exporter – we've specialised in the production of energy and emissions-intensive commodities across sectors like mining and agriculture.
Today, those exports are worth around a quarter of Gross National Income, and they are growing fast.
And those exports are a big deal in our Indo-Pacific region, too, with Australia being one of the largest and most reliable suppliers of energy, resources and agricultural products.
For some of these sectors, there is no easy way to reduce emissions. And while there are technologies that are in the lab, or being trialled, we can’t bank on them yet.
This is particularly true of agriculture – which is why our Plan sees a very important role for a thriving voluntary offsets market in Australia.
The ERF is the foundation for that market and the reforms we’ve been implementing since the King Review was finalised in mid-2020 are the building blocks for an important part of Australia’s Plan to achieve net zero.
Through the ERF, we can support technologies that reduce emissions and, for sectors where the technology solutions aren’t yet available, the ERF can help generate offsets that enable businesses to achieve their goals.
The second initiative was the development of a Technology Investment Roadmap, which kicked off around the same time.
The Roadmap is a strategic framework to guide and prioritise investment in the technological solutions necessary to achieve net zero emissions.
Its right at the heart of our Plan.
Because getting clean energy solutions to cost parity – or better – with existing approaches is the only way to reduce emissions without taxes.
It’s also an adaptive framework. One that we update through annual Statements to ensure we stay at the forefront of technology developments.
The first Statement, which we released in September 2020, set out priority areas for investment and the cost reductions we’re targeting.
It was backed by more than $1.9 billion in new investment, including re-funding ARENA, one of three technology investment agencies alongside the CEFC and Clean Energy Regulator.
Today, I’m releasing the second Statement, which builds on the initiatives of the first in three key ways:
- First, a new priority technology, ultra low cost solar, at around a third of today’s costs...
- Second, we’ve identified the timeframes we expect to achieve parity for each of our priority technologies, and this will be an important part of how Australia achieves net zero...
- Third, clearer articulation of how the government will support consumer choice and adoption of technologies that are being driven by global efforts, like electric vehicles, where our focus will be on enabling infrastructure.
As well as emerging technologies that could help “close the gap” to net zero.
We estimate the six priority areas for investment in the Roadmap - clean hydrogen, energy storage, low carbon materials including green steel and aluminium, carbon capture technology, soil carbon measurement, and now ultra low cost solar - will deliver around half of the reductions we still need to realise to achieve net zero by 2050.
For those who have been following developments closely, you’d have seen the timeframes to achieve parity at page 48 of our Plan.
Much more detail on cost drivers and how we’ve arrived at those timeframes is in this second statement.
And this is a really under-appreciated but important point – there is a non-linear relationship between falling technology costs and deployment.
Take solar, for example. It took until 2002 for the world to deploy its first gigawatt (billion watts) of solar capacity.
This was despite the cost of solar falling by roughly 12% every year since the 1970s.
By 2012, the world deployed 100 gigawatts. And sometime next year, we’ll hit 1000 gigawatts.
Our goal is to replicate that success across other areas, including batteries and hydrogen.
Getting costs down to parity is essential to unlocking widespread, global deployment.
But you might ask why, if we’re doing so well on solar, would we prioritise it?
Getting solar power down to less than $15 per megawatt hour – a third of today’s cost – will be critical to reducing electricity sector emissions, but also in unlocking the potential of other low emissions technologies like clean hydrogen.
We see much greater potential for cost reductions in solar power than other sources of renewables.
And Australia is blessed with an incredible landmass and the highest solar irradiation of any continent.
If we can get this right and achieve this goal, we will not only be helping to achieve the other stretch goals, we’ll be positioning ourselves for an advantage in low cost, bulk electricity supply.
We’re also doing this because we know Australia’s smartest minds can move the dial. Today, 90% of solar panels use an Australian designed technology.
Under our Plan, we will be at the forefront of the next generation of solar technologies, too.
And we are backing these technologies with investment.
Since the first Statement was released in September 2020, we’ve committed a further $1.7 billion in funding across a range of initiatives including:
- $565 million for international partnerships with Korea, the UK and others,
- $464 million to develop seven clean hydrogen industrial hubs across Australia, and
- $50 million for a National Soil Carbon Innovation Challenge, to rapidly find new ways to reduce the cost of measuring carbon in our soils.
Over the next decade, we will invest at least $20 billion investment in low emissions technology, which is expected to unlock at least $80 billion of total private and public investment.
We know the importance of increased Government investment in early-stage technology research, development and demonstration, both to support the achievement of the Technology Investment Roadmap stretch goals and de-risk the investment landscape for other institutional investors.
Importantly, we recognise we cannot achieve this alone and that international collaboration is essential to accelerate our efforts.
In fact, a step up in global collaboration on practical solutions is the most meaningful and lasting impact this COP could have.
That’s why we are working within Mission Innovation to drive investments and practical action in research, development and demonstration.
We are co-leading the Clean Hydrogen Mission, and will co-lead the new Net Zero Industry mission with Austria.
Accelerating the development and deployment of new and emerging low emissions technologies is critical to making net zero achievable for all countries.
We need to harness great innovators, engineers and enterprising organisations to bring low emissions solutions to the market at costs that are attractive to investors.
We are also pleased to join the Glasgow Breakthroughs initiative, and all of the breakthroughs, which align strongly with Australia’s approach.
We look forward to working with international partners bilaterally and through existing forums to achieve the “breakthroughs” and our technology stretch goals.
Dr Alan Finkel, along with chairing the Technology Investment Advisory Council which develops these Statements, has also tirelessly led our efforts to broker the international partnerships I mentioned earlier.
These partnerships are vital to tackling the global challenge of climate change, but also realising the economic opportunity of new and emerging low emissions technologies.
Together through our domestic investments and international partnerships we will achieve the goals of the Technology Investment Roadmap, and I am proud to be releasing this year’s Low Emissions Technology Statement here today.
The Low Emissions Technology Statement 2021 is available on the Department of Industry, Science, Energy and Resources website: www.industry.gov.au/LETS2021.